Atlantica at Canadian Marine Pilots’ Association Conference

Atlantica at Canadian Marine Pilots’ Association Conference

by Julie Gedeon

QUEBEC – The Maritimes have a golden opportunity to seize cargo business that West Coast ports won’t be able to handle from Asia, but only if the region obtains American and Canadian investment to build an efficient distribution network, says public policy consultant Brian Lee Crowley.

“Increasingly, shipping headed for East Coast and neighbouring destinations is borrowing the so-called Suez Express route,” the president and chief executive officer of AIMS, a think-tank firm concentrating on Atlantic Canada’s economic and social issues, told delegates at the First Biennial Canadian Marine Pilots’ Association Conference in Quebec City. “As a result, the East Coast of North America is now a destination for the industrial output of fast-growing China, India and Southeast Asia, as well as a departure point for our exports back to them.”

West Coast ports are butting up against capacity limitations, Mr. Crowley said. According to Drewry Consultants, projected traffic will exceed the capacity of the major West Coast’s ports within a couple of years.

“If you want a foretaste of what this will mean, think about what happened (in the summer of 2004) when Los Angeles and Long Beach were already exceeding capacity, with disastrously disruptive effects on the world trading system,” Mr. Crowley noted, adding that few options exist for most West Coast ports to greatly expand their capacity, at least in the short run.

The Panama Canal has traditionally provided an alternative route, but it’s already operating at 93 per cent capacity and can’t absorb the predicted 15-per-cent annual rise in Asia traffic bound for the Eastern half of North America.

“It will take $8 billion to $10 billion and many years to expand the canal, which will also raise the cost of using the canal, and that money must be borrowed on the credit of Panama,” Mr. Crowley noted.

As is, the canal faces other limitations. It currently accommodates ships with up to 4,000 containers. The next generation of ships, appropriately called post-Panamax, is or will be carrying on average 10,000 containers. Their impact is already being felt.

“If you were unloading the entire cargo of one of these ships in a port, as often happens at Los Angeles or Long Beach, even with half the loads going to trains, the line of tractor trailers needed to haul the containers from portside would stretch for 32 kilometres or 20 miles,” Mr. Crowley pointed out.

Most of the new ships entering the world fleet over the next five years will be post-Panamax vessels ready to transport cargo from China, Southeast Asia and India to North America. To avoid West Coast delays and the Panama Canal’s limitations, shippers will increasingly look at having goods sent to North America’s East Coast ports via the Suez Canal. With the difference between using the Panama Canal or Suez Canal to go from Hong Kong to New York City being only 482 kilometres (300 miles), distance is not an issue, Mr. Crowley emphasized.

The Port of New York and New Jersey, however, can’t easily accommodate post-Panamax ships. “The harbour is too shallow,” Mr. Crowley said. A billion dollars is being spent to dredge the harbour and blast out rock to increase the depth, but ongoing silt buildup might still make keeping a 15-metre (50-foot) draft tricky. The Bayonne Bridge at the harbour’s entrance poses another problem: it’s too low to accommodate fully loaded ships.

“Only Halifax in particular and Canadian East Coast ports in general can lighten the load of the big ships and make New York/New Jersey accessible to them,” Mr. Crowley stated.

He envisions Halifax, with its natural depth and ideal location on the Suez-Europe-New-York ‘Great Circle’ route, as the centre of a hub-and-spokes network that has cargo unloaded off huge ships at Halifax and then disseminated by rail, truck or short-sea shipping. This shift is already gearing up, Mr. Crowley noted, with Sears and other retailers making Halifax their eastern distribution centre for Asian merchandise, and China Shipping Line announcing the city would be its first North American port of call on its new weekly around-the-world cargo service.

In order to build on these coups, however, Mr. Crowley stressed it’s essential to develop an efficient transportation network to distribute goods.

“The centre of the region running from Halifax south to New York City and Philadelphia or west to Buffalo, Ohio and Ontario is largely a transport black hole,” he lamented. “If you want to go by the shortest route to the tens of millions of people who live in the U.S. Northeast, you cannot do so on the interstate network, but only on secondary roads.”

While rail connections with Chicago are excellent, Mr. Crowley blamed CN’s “disinterest” for making it almost impossible to connect by rail from Halifax with Buffalo, the fifth largest port of entry into the United States, and the hub of “an equally impressive distribution network.”

Heading south from Halifax, the main highway from the nearest land border crossing to the U.S. permits only 80,000-pound truckloads, making it impossible to move a fully laden container by highway from Halifax to Boston or New York.

On the water, protectionist cabotage laws that require foreign vessels to offload to domestic inter-port services are hindering transport.

“Short-sea shipping should allow us to deliver goods directly to the heart of major urban markets without having to use scarce road and rail capacity,” Mr. Crowley emphasized. “When you consider that the U.S. Department of Transport predicts truck traffic on U.S. highways will double in the next 15 years, you can see why short-sea shipping is increasingly going to be the jewel in the transport crown.”

Developing short-sea shipping is as much in the U.S. Northeast’s interests as the Maritimes’, he noted, with Halifax being the only port north of Virginia capable of docking fully loaded post-Panamax vessels, and the Port of New York and New Jersey having little space for additional development.

“It is now widely understood that the transport infrastructure across the Hudson River is at maximum capacity, which means the west bank of the Hudson River is now effectively the east coast of North America for international trade purposes,” he said. A network of short-sea shipping routes linked to Interstate 95 with a 100,000-pound load limit would end the “relative isolation of the area between the east bank of the Hudson and the Atlantic.”

Hillary Rodham Clinton and other senators from Northeast states have successfully lobbied Washington for a multi-modal transportation study of the corridor from Halifax, across New Brunswick, Maine, New Hampshire, Vermont and northern New York to the Ontario border. The study will cost $1 million.

Over the past three months, the U.S. Congress also designated an east-west highway from St. Stephen, New Brunswick/Calais, Maine, across to Watertown, New York, as a high priority to connect ultimately with the major north-south corridor in Buffalo.

“I might also mention that a major Icelandic transporter has just bought a major interest in the short-sea shipping service connecting Halifax with the Port of Portland, Maine, which has just enlarged its customs jurisdiction to include the major multi-modal terminal in the Lewiston-Auburn area,” Mr. Crowley related. “U.S. customs inspectors are now stationed in Halifax, inspecting containers bound for U.S. destinations. Things are clearly gathering momentum.”

He warned investment and commerce are headed increasingly to regions that can guarantee quick and efficient transport. The competition for that business is already becoming fierce. Texas is building a statewide transportation network that will include six passenger vehicle lanes, four truck lanes, six rail lines with high-speed capacity, and a dedicated utility line at a cost upwards of $145 billion over the next 50 years. Mexico plans to build a $1-billion container port facility on the Pacific Coast and link it to the U.S. heartland via a rail service with a customs clearance operation that will soon open in Kansas City. West Coast ports are looking at various ways to increase their capacity with expansion plans as far north as Prince Rupert.

“There is no room for complacency anywhere as the world trade networks become increasingly fluid, as flows build up and begin to seek new points of contact with major markets,” Mr. Crowley warned. “Now is the time for all of us, wherever we are, to take part in this debate about where we fit in the emerging global trade networks, before the networks are formed and solidified for the next 20 years.”